|
In order to have enough money to educate your children, you need to begin saving now. Both parents and grandparents can contribute to this savings plan. It is critical to have a proper mix of assets and income in the parents and child’s name. The financial aid calculation takes into account the assets and income in each name. Any financial aid the student receives is based, in part, upon this calculation. Internal Revenue Code Section 529 allows any funds taken out for higher education to be tax-free. States set up Section 529 plans individually. Thirty-six states have plans available. You do not have to be a resident to participate in a particular state plan. Each one has different rules. You can choose the one or ones, which work best for you. Section 529 plans are one of the best ways to save for college. In addition to the federal tax exemption on withdrawals, many states already exempt investment gains in their own plans from state income taxes. Provisions in the new tax law make it easier to switch among different state sponsored plans. It also expands the types of college expenses for which tax-free withdrawals can be made. With thirty-six different Section 529 plans to choose from, in addition to Education IRA’s and state prepaid tuition plans it is important to properly plan. You will want to coordinate these with available financial aid. Depending on your choice, any potential financial aid could be affected. We are able to assist you in determining your needs and then work with you to develop and implement a savings plan that will maximize the funds you will have available when needed. Other than purchasing a house, this may be your largest expenditure. It is important that you properly save and plan for it. | 